Student Housing Newsletter 2021

BERKADIA STUDENT HOUSING NEWSLETTER 2021

a Berkshire Hathaway and Jefferies Financial Group Company

STUDENT HOUSING SALES

Sales Volume Sales during the fourth quarter of 2020 accounted for more than half of all last year’s transactions and dollar volume. This upswing in activity during the last three months is a positive portent for the future of the student housing sector. The initial decrease was the result of several factors related to the COVID-19 pandemic: early university shutdowns, stringent debt requirements, enrollment shortfalls due to online-learning policies and general uncertainty. The result was the student housing segment decreased 30% in dollar volume and 40% transactionally year-over-year.

As transactions dropped in all product types, the largest pullback was among individual transactions. Student housing portfolio sales in 2020 were up 4.0% from the prior year’s dollar volume and accounting for more than one-third of total sales volume. We fully expect the debt markets and sales volume to continue to rebound as in-person learning resumes and economic changes fuel enrollment.

Individual Sales

Portfolio Sales

Total Property Count

2019

2018

2017

2016

2015

2014

2013

Source: Berkadia; Real Capital Analytics; and CoStar, based on properties and portfolios ~$2.5mil or greater. * As of February 1, 2021

Average Price Per Bed The average price per bed increased 7.5% from 2019 to $77,634 in 2020. This increase was underpinned by 40 transactions

$43,035

$46,931

$48,590

$52,870

$59,301

$65,512

$64,619

$70,596

$75,791

$72,207

where price per bed was more than $100,000.

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020*

Source: Berkadia; Real Capital Analytics; and CoStar, based on properties and portfolios ~$2.5mil or greater. * As of February 1, 2021

National Price Per Bed by Distance

$51,498

The overall average price per bed

$48,280

increased in 2020, with a price premium for student housing communities

$106,088

closest to campus. From 2019 to 2020,

$91,656

the average price per bed rose 2.5% among student housing communities within 0.5 mile of a campus. The sharpest increase was among properties located between 0.6 mile and one mile of campus, rising 49.2% yearover-year.

≤ 0.5 Mile 0.6 to 1 Mile 1.1 to 2 Mile > 2 Mile

Source: Berkadia; Real Capital Analytics; CoStar; and Google Maps. Sample size 133 properties. * As of February 1, 2021

STUDENT HOUSING SALES | CAP RATE Cap Rate Overview The average student housing cap rate decreased 20 basis points (bps) year over year, to 5.5% in 2020. Reflecting a cap rate 30 bps lower than the preceding five-year average. The overall decrease reflected the trend among market-rate multifamily product in 2020. The spread between conventional multifamily and student housing held year over year at 30 bps. For properties located within two miles of Power 5 schools, sales had an average cap rate of 5.35%, more than 10 basis points lower than other student housing properties sold within a similar range of other higher education institutions.

Source: Berkadia; Real Capital Analytics; and CoStar, based on properties and portfolios ~$2.5mil or greater. Weighted cap rates were not available, so a straight-line average for cap rates was used.

STUDENT HOUSING SALES | TOTAL SALES By the Numbers

$4.5b

$194k

TOTAL SALES VOLUME

$78k

AVERAGE PRICE PER UNIT

AVERAGE PRICE PER BED

146

5.51% AVERAGE CAP RATE

NUMBER OF PROPERTIES SOLD

Investment Activity For the second-consecutive year, private buyers comprised the largest share—41%—of acquisition volume in 2020.

However, their share is down nearly 9% from 2019 as international buyers and institutional buyers picked up activity in 2020. International buyers’ volume is up nearly 8% from 2019, while institutional buyers increased 5%. This upward trend signals a revitalized appetite for the strong yields within the Student Housing industry. Increases in the both the foreign and institutional buyer levels points to a return to normalcy from 2019 shortfalls among international and institutional capital, even amid the challenges faced by the pandemic in 2020.

Private

Public Listed/REITs

Cross-Border

Institutional

1%

4%

User/Other

3%

1% 29%

32%

20%

25%

37%

50% 4%

2017

23% 0%

10%

23%

2016

2% 6%

62%

37%

4%

2018

2019

Source: Berkadia; Real Capital Analytics; and CoStar, based on properties and portfolios ~$2.5mil or greater. *As of February 1, 2021

2020*

STUDENT HOUSING SALES | TOP BUYERS BY DOLLAR VOLUME RANK

BUYER

1

Global Student Accommodations Group

2

Korea Inv Securities, Landmark Properties, Ocean West, Tiger Alternative Investors

3

TPG Real Estate/Cardinal Group

4

Timberline Real Estate Ventures

5

Greystar

6

Student Quarters

Source: Real Capital Analytics and Co-Star. Based on properties ~$5mil or greater. * As of February 1, 2021

STUDENT HOUSING SALES | TOP INDIVIDUAL PROPERTY NAME

CITY

STATE

UNITS

YEAR BUILT

BEDS

Sol at West Village

Davis

CA

663

2011

2,289

The Varsity at College Park

College Park

MD

258

2011

901

Retreat at Orlando

Orlando

FL

221

2014

894

Rush

Charlotte

NC

332

2018

887

Northpoint Crossing I &II

College Station

TX

627

2014

841

Quarry Trail

Knoxville

TN

210

2008

840

Stadium Village

Marietta

GA

198

2015

792

Quantum at West Call

Tallahassee

FL

225

2018

752

Heritage Apartments

Columbus

OH

228

1962

685

Tempe Station

Tempe

AZ

400

2000

684

NXNW Tallahassee Florida

Tallahassee

FL

219

2012

679

Skyloft Austin

Austin

TX

212

2018

674

The Dean

Champaign

IL

322

2020

672

Sol

Tempe

AZ

225

2010

640

West 6th

Tempe

AZ

375

2009

629

The Mix Residences

Atlanta

GA

324

2018

604

Latitude

Champaign

IL

324

2016

604

Vertex

Tempe

AZ

220

2015

600

Aspen Heights Auburn

Auburn

AL

208

2012

600

University Park

Boca Raton

FL

159

2015

598

Moontower

Austin

TX

166

2020

567

The Indy

Marietta

GA

172

2019

543

The Standard

Saint Louis

MO

163

2015

465

Lothlorien

Seattle

WA

146

2007

157

The Alabama

New York

NY

98

1903

142

STUDENT HOUSING SALES

NUMBER OF BEDS UNDER CONSTRUCTION | BY REGION

WEST COAST

37

PROPERTIES

22.7K TOTAL BEDS

ROCKY MTN.

15

PROPERTIES

MIDWEST

8.1K

29

TOTAL BEDS

PROPERTIES

8.3K

TOTAL BEDS

NORTHEAST

34

PROPERTIES

17K

TOTAL BEDS

SOUTHEAST

80

PROPERTIES

TEXAS / OK.

20

PROPERTIES

8.9K

TOTAL BEDS

36.5K TOTAL BEDS

STUDENT HOUSING PIPELINE BREAKDOWN | BY REGION By the Numbers

Pipeline Breakdown Overview The pipeline for purpose-built student housing consists of 215 properties in all phases of construction. These properties comprise a total 101,470 beds. One year ago, 253 properties representing 99,921 beds were under construction nationwide.

The largest share of properties in the pipeline is in the Southeast region, where 80 properties representing 36,469 beds are located.

Additionally, 78 properties are in various stages of planning / permitting nationwide, representing a total 45,612 beds.

40,000

30,000

20,000

TOTAL BEDS

10,000

0 WEST COAST

Under Construction

ROCKY MTN.

Breaks Ground in 2021

MIDWEST

NORTHEAST

TEXAS/OK.

SOUTHEAST

Breaks Ground After 2021

STUDENT HOUSING ONAND OFF-CAMPUS BEDS+

WEST COAST

ROCKY MTN.

MIDWEST

NORTHEAST

TEXAS/OK

SOUTHEAST

TOTAL

Under Construction*

22,672

8,162

8,299

17,022

8,846

36,469

101,470

Breaks Ground in 2021**

10,067

1,450

8,789

4,396

208

7,435

32,345

Breaks Ground After 2021***

2,858

-

1,072

1,874

-

5,303

11,107

Grand Total

35,597

9,612

18,160

23,292

9,054

49,207

144,922

+Does not include student competitive housing *Under construction and under construction / lease-up stages **In planning stage where a start date in 2021 is indicated, according to RealPage, subject to change ***In pre-planning stage where a start date after 2021 is indicated, according to RealPage, subject to change per RealPage, as of February 1, 2021

STUDENT HOUSING PIPELINE | TOP 50 The table below depicts the top 50 universities by bed count with purpose-built student housing projects currently under construction.

SCHOOL

TOTAL BEDS

University of California - Los Angeles

4,060

University of Texas at Austin

3,945

University of California - Davis

3,550

University of Washington

3,459

University of Maryland

2,831

University of Nevada - Reno

2,531

Appalachian State University

2,219

Georgia Institute of Technology

2,066

Cornell University

2,000

Virginia Tech

1,952

University of Florida

1,917

University of Alabama

1,714

University of Illinois - Urbana-Champaign

1,672

University of Georgia

1,555

University of California - Riverside

1,500

Clemson University

1,453

Arizona State University

1,356

University of Arkansas

1,334

University of Oregon

1,308

Rochester Institute Of Technology

1,281

California State University - Sacramento

1,160

University of California - Irvine

1,050

Princeton University

1,020

Stevens Institute of Technology

994

University of Arizona

960

Missouri State University

958

University of North Carolina - Wilmington

948

Western Washington University

913

Louisiana Tech University

912

University at Buffalo - State University of New York

903

University of California - Merced

885

Tulane University

882

Louisiana State University

881

University of Alabama at Birmingham

879

Texas State University

847

George Mason University

825

East Carolina University

804

Michigan State University

792

Washington State University

752

Georgia State University

742

University of Miami

736

University of North Carolina - Charlotte

727

Pennsylvania State University

725

Auburn University

715

Texas A&M University Texas Medical Center

714

Loyola Marymount University

713

Tennessee State University

700

Vanderbilt University

700

Indiana University

693

Kennesaw State University

681

Source: RealPage. Student housing (no student competitive) on- and off-campus under construction or under construction / lease-up stage, as of February 1, 2021.

STUDENT HOUSING PIPELINE | ENROLLMENT PROJECTION The table below depicts the top 50 universities by bed count with purpose-built student housing projects currently under construction.

Enrollment Projection Overview These 12 universities have the greatest disparity between the projected five-year growth in enrollment and planned new student housing development. There are many local factors that can lead to slowdown in student housing development, such as: temporary moratoriums on development, enrollment decrease, and uncontrollable socioeconomic events.

While no attempt is made at estimating the impact of supply-demand imbalances on property values near these or any other universities, investors should be aware of the potential for outsized price appreciation at existing properties near universities where a shortage of student housing is present or expected.

FIVE-YEAR ENROLLMENT CHANGE PROJECTION AND STUDENT HOUSING PIPELINE DISPARITY

Source: RealPage. Enrollment estimates and student housing (no student competitive) on- and off-campus under construction and at various stages of the planning / permitting process as of February 1, 2021. Does not include partially completed properties under lease-up.

Total enrollment at some of these universities may include satellite campus and online enrollment.

FASTEST-GROWING FLAGSHIP UNIVERSITIES | 2020

TOP 5

2018-19 GROWTH RANK SCHOOL 1 Georgia Institute of Technology

Y-O-Y CHANGE 3,768

2018 FALL ENROLLMENT 32,722

2019 FALL ENROLLMENT 36,490

FIVE-YEAR PROJECTION 4,034

2

Kennesaw State University

2,387

35,420

37,807

790

3

University of Illinois - Urbana-Champaign

1,903

49,702

51,605

4,518

4

Utah Valley University

1,797

39,931

41,728

3,667

5

Arizona State University

1,701

51,585

53,286

2,561

6

University of California - Riverside

1,626

23,922

25,548

2,326

7

Florida Atlantic University - Boca Raton

1,624

21,562

23,186

-389

8

University of California - Davis

1,594

38,035

39,629

2,166

9

University of Michigan

1,374

46,716

48,090

3,345

10

Appalachian State University

1,225

18,055

19,280

656

11

Florida State University

1,213

41,005

42,218

706

12

University of California - Berkeley

1,194

42,501

43,695

4,120

13

University of Southern California

1,190

47,310

48,500

4,372

14

Purdue University

1,140

43,411

44,551

2,179

15

University of North Texas

1,105

38,087

39,192

2,176

16

University of Colorado - Boulder

1,102

36,548

37,650

2,509

17

University of Central Florida

951

68,081

69,032

4,483

18

University of Wisconsin - Madison

906

44,411

45,317

-84

19

University of California - Irvine

876

36,032

36,908

4,198

20

Clemson University

871

24,951

25,822

3,080

21

Baylor University

826

17,207

18,033

214

22

North Carolina State University

825

35,479

36,304

-5

23

University of Texas at Dallas

788

28,755

29,543

4,107

24

Louisiana State University

774

30,987

31,761

606

25

University of North Carolina - Wilmington

752

16,747

17,499

1,776

26

Oregon State University

733

30,986

31,719

1,861

27

Boise State University

732

25,540

26,272

1,259

28

University of Massachusetts

711

26,316

27,027

1,273

29

University of Arizona

701

45,217

45,918

2,967

30

University of Nevada - Las Vegas

697

30,474

31,171

2,082

31

University of Cincinnati

691

38,062

38,753

2,951

32

California State University - Long Beach

618

37,457

38,075

2,344

33

University of South Carolina

569

34,795

35,364

2,563

34

University of Tennessee

566

28,894

29,460

1,075

35

University of North Carolina - Pembroke

561

7,137

7,698

684

36

George Mason University

547

37,316

37,863

2,009

37

Jacksonville State University

542

8,479

9,021

6

38

Virginia Tech

536

34,181

34,717

2,470

39

Texas Tech University

533

38,209

38,742

2,910

40

Western Carolina University

528

11,639

12,167

583

41

University of Florida

525

52,218

52,743

3,459

42

San Jose State University

514

32,423

32,937

2,530

43

University of California - San Diego

509

37,887

38,396

4,245

44

University of Miami

480

17,331

17,811

610

45

University at Buffalo - State University of New York

420

31,503

31,923

991

Total enrollment at some of these universities may include satellite campus and online enrollment.

STUDENT ENROLLMENT 5-YEAR OUTLOOK | BY STATE Five-Year Outlook Overview These 12 states are projected to have combined enrollment gains totaling 189,900 students in the next five years.

Approximately 82,300 of the 189,900 new students are expected to enroll at non-Power 5 schools. This represents 43.3% of total enrollment, a 5.5% increase from last year’s projected level of enrollment at non-Power 5 schools.

Source: RealPage University Top 175; projections subject to change.

SUPPLY AND DEMAND VARIATION, TOP 50 SCHOOLS | 2020 RANK

SCHOOL

2019 FALL ENROLLMENT

2020 TOTAL SUPPLY (BEDS)*

HOUSING SHORTFALL

EFFECTIVE RENT**

2019-20 TUITION

1 2 3 4 5 6 7 8 9 10 11 12 13 15 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

Utah Valley University Arizona State University - Tempe Campus Florida International University California State University - Long Beach University of Central Florida University of California - Berkeley California State University - Northridge University of California - Davis University of California - Los Angeles University of Illinois - Urbana-Champaign University of Colorado - Boulder University of Iowa Oregon State University Pennsylvania State University Washington State University George Mason University Indiana University University of Cincinnati Brigham Young University Iowa State University California State University - Fullerton Ohio State University University at Buffalo - State University of New York Boise State University Kent State University West Virginia University University of California - Santa Barbara Purdue University Missouri State University San Jose State University Virginia Tech University of Utah Rutgers University - New Brunswick University of North Texas Kansas State University University of Wisconsin - Madison Indiana University - Purdue University Indianapolis University of Memphis University of California - San Diego University of Michigan University of Massachusetts Utah State University Northern Arizona University California State University - Sacramento Michigan State University Illinois State University Grand Valley State University - Allendale Campus University of Minnesota University of Wisconsin - Milwaukee University of Connecticut

41,728 53,286 51,688 38,075 69,032 43,695 38,391 39,629 45,742 51,605 37,650 31,240 31,719 47,223 31,607 37,863 43,260 38,753 34,317 33,391 38,964 61,391 31,923 26,272 27,716 26,839 26,314 44,551 23,453 32,937 34,717 32,818 50,175 39,192 21,719 45,317 29,537 21,685 38,396 48,090 27,027 17,279 30,736 31,156 49,809 20,878 24,033 51,327 23,992 22,547

14,439 16,877 7,178 39,272 15,160 12,570 15,375 23,118 29,488 16,694 10,402 11,409 27,627 12,030 19,610 25,995 21,961 18,804 17,991 23,595 46,246 17,223 12,148 13,766 12,998 12,494 30,990 9,991 19,509 21,434 19,550 36,947 25,993 8,669 32,751 17,206 9,381 26,192 36,185 15,379 5,788 19,342 20,154 38,891 9,990 13,190 40,567 13,815 12,509

41,728 38,847 34,811 30,897 29,760 28,535 25,821 24,254 22,624 22,117 20,956 20,838 20,310 19,596 19,577 18,253 17,265 16,792 15,513 15,400 15,369 15,145 14,700 14,124 13,950 13,841 13,820 13,561 13,462 13,428 13,283 13,268 13,228 13,199 13,050 12,566 12,331 12,304 12,204 11,905 11,648 11,491 11,394 11,002 10,918 10,888 10,843 10,760 10,177 10,038

$565 $836 $996 $1,597 $800 $2,223 $1,411 $1,071 $2,237 $641 $1,180 $643 $739 $751 $574 $1,172 $636 $878 $471 $554 $1,335 $855 $668 $747 $596 $550 $1,461 $624 $544 $1,922 $632 $976 $1,146 $689 $456 $842 $859 $512 $1,665 $967 $807 $460 $824 $928 $632 $552 $537 $1,152 $1,097 $1,210

$5,122 $10,710 $6,168 $5,742 $6,368 $11,442 $5,742 $14,490 $11,442 $12,036 $10,728 $8,073 $9,840 $17,416 $9,953 $9,060 $9,575 $9,322 $5,790 $8,042 $5,742 $10,662 $7,070 $5,532 $11,131 $8,976 $11,442 $9,208 $6,540 $5,742 $14,420 $8,253 $12,230 $8,403 $6,540 $10,725 $8,580 $8,208 $12,570 $15,230 $15,791 $6,549 $10,650 $5,742 $14,460 $11,524 $12,860 $13,318 $8,091 $13,724

*Represents the total of beds in on-campus housing (university owned) and off-campus housing (purpose-built) and student-competitive housing. The bed counts were obtained from Axiometrics sampling of the total number of these apartment communities. Both the total number of apartment communities and the proportion of properties sampled vary by market. **Weighted average monthly effective rent per bed from September 2019 to August 2020. Only includes off-campus purpose-built (not student-competitive) properties that have been stabilized for two or more consecutive periods.

TOTAL ENROLLMENT AND SUPPLY | BY SIZE OF SCHOOL Total Enrollment and Supply Overview Among RealPage’s Top 175 universities that have enrollment exceeding 30,000 students, the total of on-campus and off-campus student housing beds typically accommodates approximately 35% of students enrolled, the lowest number among all groups shown in the graph. At Power 5 universities, the housing needs of about 42% of students are met by on- and off-campus housing.

Overall, the greatest disparity between off-campus and on-campus housing is seen at universities with at least 50,000 students. There is an influx of nearly 60,000 off-campus beds at these universities.

These statistics show the maximum number of beds available on-campus and do not account for the dedensification needs brought on by the Covid-19 pandemic. It is likely that some dedensification measures will be permanent, increasing this gap and increasing the off-campus demand.

ENROLLMENT

TOTAL OFFCAMPUS BEDS*

TOTAL ONCAMPUS BEDS**

TOTAL ENROLLMENT***

CUMALTIVE COUNT

At least 50,000 Students

145,711

86,283

595,657

10

At least 40,000 Students

270,297

224,578

1,366,670

27

At least 30,000 Students

504,222

450,602

2,742,411

66

At least 25,000 Students

626,386

572,425

3,348,394

88

At least 20,000 Students

723,187

673,852

3,882,523

112

At least 15,000 Students

769,781

740,334

4,181,635

129

*Fall 2020; student-competitive properties not included **Fall 2020 ***Fall 2019 enrollment Axiometrics University Top 175. Some of the top 175 schools had enrollment below 15,000 students.

BERKADIA STUDENT HOUSING TEAM Kevin Larimer

Senior Managing Director

Genna Jago

Marketing Project Manager

248.341.3305 | kevin.larimer@berkadia.com

Peter Benedetto

Senior Managing Director

Brandon Buell

Senior Managing Director

248.208.3462 | peter.benedetto@berkadia.com

346.444.8982 | brandon.buell@berkadia.com

Aaron Moll Director

Nick Swoboda Financial Analyst

248.208.0529 | aaron.moll@berkadia.com

BERKADIA STUDENT HOUSING | HISTORIC CLOSINGS

Debt Sales

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